The ERC-20 Token Allowance Function

The ERC-20 Token Allowance Function

Ethereum dApp tokens are just beginning to proliferate. And, with them, comes new standards to ensure the safe transfer of those tokens across the ecosystem. One of these new standards found in ERC20 is the Token Allowance Permission.

Ethereum dApp tokens are just beginning to proliferate. And, with them, comes new standards to ensure the safe transfer of those tokens across the ecosystem. One of these new standards found in ERC20 is the Token Allowance Permission.

Because the Ethereum blockchain allows transactions with smart contracts and those smart contracts can be facilitated by 3rd parties – like a DEX or Protocol Relayer – permissions have to be granted to the 3rd party by token owners before those smart contracts can execute.

Because the Ethereum blockchain allows transactions with smart contracts and those smart contracts can be facilitated by 3rd parties – like a DEX or Protocol Relayer – permissions have to be granted to the 3rd party by token owners before those smart contracts can execute.

The Allowance Permission gives the 3rd party the right to facilitate a transaction with the owners token. This could be a simple one-time permission on every token that sets a high allowance for unhindered transfers. Or, it could be a more controlled method where exact allowance amounts are set for each token.

The Allowance Permission gives the 3rd party the right to facilitate a transaction with the owners token. This could be a simple one-time permission on every token that sets a high allowance for unhindered transfers. Or, it could be a more controlled method where exact allowance amounts are set for each token.

Setting this allowance does not mean you are giving your tokens to the 3rd party. All it means is you are willingly allowing the smart contract to transfer up-to a specified amount of a token on your behalf.

Setting this allowance does not mean you are giving your tokens to the 3rd party. All it means is you are willingly allowing the smart contract to transfer up-to a specified amount of a token on your behalf.

Whether a relayer, like Radar, is sending your transaction to a Smart Contract protocol, or a DEX is executing their own Smart Contract, the ERC20 Allowance Permissions make sure your tokens are never transacted without your consent. Ultimately, building the Allowance into new tokens will ensure the Ethereum network becomes more secure and efficient for everyone.

Whether a relayer, like Radar, is sending your transaction to a Smart Contract protocol, or a DEX is executing their own Smart Contract, the ERC20 Allowance Permissions make sure your tokens are never transacted without your consent. Ultimately, building the Allowance into new tokens will ensure the Ethereum network becomes more secure and efficient for everyone.